US Home Prices Show First Yearly Gain Since 2006

iStockphoto/Thinkstock(WASHINGTON) — U.S. home prices in 2012 saw the first yearly gain since 2006, when the housing bubble was just beginning to burst, according to the Case-Shiller home price index.

Home prices in major cities across the country rose 7.3 percent in 2012. Of the 20 cities tracked by the index only New York saw a slight drop in prices.

Though home prices are increasing, they are still back to about 2003 levels, meaning many people who bought homes at the height of the bubble likely have not recouped what they paid for their home.

Homes are usually Americans’ biggest investment and an increase in home prices adds significantly to household wealth. As prices move up they add to the general economic recovery.

The housing market though has yet to completely return to normal; there are now too few homes for sale and a spurt in homebuilding is needed to get the market truly back on track.

A separate report from the government Tuesday morning shows that sales of new homes jumped to their highest level since July 2008. Sales surged 15.6 percent in January to a 437,000 annual pace, according to the Commerce Department.

New homes make up a small chunk of the housing market but have an important ripple effect on the economy through construction jobs and sales of home furnishings and appliances.